Aussie dollar rallies to a 5-month high against the US dollar  

Daily Currency Update

The Australian dollar is stronger this morning when valued against the Greenback, trading at US$0.6457 at the time of writing. The AUD/USD pair posted a fresh five-month high on Monday, nearing the psychological level of US$0.65. The Aussie pair strengthens as the Australian dollar (AUD) outperforms, with the single-country continent’s Labor Party securing a second consecutive three-year term after winning parliamentary elections.

Investors are still uncertain about Australia’s economic prospects in the face of the trade war between the United States (US) and China. Given that Australia is the leading trading partner of China, concerns over Beijing’s economy weigh on the Australian dollar. National Australia Bank (NAB), one of Australia’s Big Four banks, has reaffirmed a massive interest rate call just 48 hours after Labor’s historic election win. NAB anticipates that the Reserve Bank will implement the equivalent of four rate cuts by August, the biggest chunk of which will come within weeks.

The NAB Economic Update, released on Monday, flagged a whopping 100 basis point cut to interest rates by August, with 50 bps on May 20. NAB has cut its 2025 GDP forecast by 25bps to 2% and lifted Australia’s forecast peak unemployment rate from 4.2% to 4.4%.